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US workers are approaching a retirement crisis, even as the economy and stock markets are seemingly improved: New data shows that 57 percent of US workers and retirees report less than $25,000 in total household savings and investments, excluding their homes.

That data is the result of a survey conducted by the Employee Benefit Research Institute (EBRI), and it’s jarring because, in 2008, only 49 percent of workers reported having this little money saved.

Today, the situation has reached crisis levels: In fact, only half of the 1,003 workers and 251 retirees surveyed said they could come up with $2,000 for an unexpected need in the next month.

The outlook is no better. The percentage of workers who have saved for retirement plunged from 75 percent in 2009 to 66 percent in 2012. According to the survey, 28 percent of workers are not confident they will have enough money to retire comfortably – the highest level in the study’s 23-year history.

One problem is we’re living longer. For example, a man who reaches age 65 in 2013 is expected to live an additional 20.5 years, up from 19.5 in earlier projections. Our extended lifespans will force us to stretch our retirement savings.

We’re not relying on pension plans either; fewer and fewer Americans are covered by traditional pension plans. According to US Department of Labor data compiled by the EBRI, pension plan participation declined dramatically from 28 percent in 1979 to 3 percent in 2011.

If you think you need to reevaluate your own retirement savings, your advisor can help.

Your estate represents a lifetime of work, so it’s understandable you’ll want to leave as much as possible to your heirs. However, today’s costly probate procedures present obstacles; for a hassle-free transfer, you need to simplify the probate court process.

After you die, your estate will be processed in one or more state probate courts, depending on where your assets are located.

If you die without a will, the court will decide how to distribute your assets, based on state laws. This can be an expensive process. Your estate may have to pay for court costs and legal advice your heirs may require.

You can simplify the probate court process and associated costs by increasing the items that are considered “non-probate” and are transferred without a probate procedure. These include:

Assets registered as “joint tenants with rights of survivorship.” Ownership of these accounts passes directly to the other named account holders immediately upon your death.

Assets with a designated beneficiary. Many retirement accounts (such as IRAs and 401(k) plans), and insurance products, allow you to name individuals or institutions as recipients of these assets when you die. These assets are excluded from your probate estate and transferred directly.

Assets in a revocable living trust. A revocable living trust is a legal entity which effectively holds legal title to assets within the trust, providing for a direct transfer of assets to your beneficiaries.

Transfer on death. You can specify that many of your assets, such as securities and brokerage accounts, be set up as “transfer on death” (TOD). Upon your death, they will bypass the probate court process and go directly to whomever you specify in your TOD policy.

You may not be able to take it with you, but with thought, you can ensure your heirs will inherit it hassle-free.

If you’ve received a tax refund this year, or if you expect to receive one next year, what is your plan for the money?

One option is buying a long-awaited luxury, but financially astute investors know there are alternatives that might be more beneficial in the long run. Below are details on three of them:

Invest the money in an Individual Retirement Account (IRA).

The earlier you invest, the more you benefit from compounding.

As a hypothetical example, let’s assume you invest $3,000 in an IRA each year for the next 10 years, and the IRA grows at 8 percent. If you make the contribution at the end of each year – in December – the account could grow to $44,589, according to Thomson Financial Company. But if you make the contribution earlier each year – say, in April – you’ll end up with $46,936.

That’s because, by making the contribution earlier, you’ll gain an additional nine months of tax-deferred compounding.

Give your child or grandchild a gift.

The Uniform Gift to Minors Act and Uniform Transfer to Minors Act allow individuals to create a custodial account for the benefit of a minor.

Let’s assume you’d like to help your 10-year-old granddaughter save for college, so you start investing $200 per month and continue doing so until she turns 18. Assuming a hypothetical average annual return of 8 percent, she will have $36,457 in her account when she reaches age 18.

Hire a financial advisor.

Everyone likes receiving a tax refund, but it isn’t necessarily a good thing. Getting a refund means you overpaid throughout the course of the tax year – a fact that essentially means you’re loaning money to the government, interest-free. A financial advisor can tell you how to better plan so you can have that money through the year.

The tax and legal information in this article is merely a summary of our understanding and interpretation of some of the current laws and regulations and is not exhaustive. Investors should consult their legal or tax counsel for advice and information concerning their particular circumstances.

Investors who don’t recognize the big performance potential of small-cap stocks could be missing investment opportunities.

Small-cap stocks are those with a relatively small market capitalization, which is a measure of a company’s size. It’s calculated by multiplying the number of shares by the current market price.

Defining the small-cap universe has been challenging for the investment community. Several indices have been established to measure this market segment, including the Russell 2000 Index, the S&P Small-Cap 600 Index and the Wilshire Small-Cap Index.

When it comes to the average market capitalization, however, each index is different, so there’s no clear definition of just what range of market capitalizations a stock has to fall into to be a small-cap stock.

Although small-cap companies are clearly diverse, they do share some characteristics that may make them appealing to investors. They tend to be stocks of growing companies. Also, their size can allow them to react more quickly to changes in the economy than larger companies can.

These characteristics help explain why small-cap stocks have traditionally performed well as the economy is emerging from a downturn. Indeed, this tendency to perform well when other asset classes are not performing well is one of the best reasons to invest in small-cap stocks: They offer diversification.

Of course, small-cap stocks aren’t without risks. It can be harder to find buyers for these stocks, so it may take some time to sell your shares when the economy or markets perform poorly. Your advisor can explain more.

We’re all living longer, and this means many of us will require long-term care such as nursing-home care or in-home services. The costs of these services can be overwhelming, but you can prepare for these financial demands with careful planning.

What’s covered?

Although Medicare does cover long-term care to a certain extent, this coverage is limited. Generally, Medicare only pays for about three months of nursing-home care immediately following a hospitalization, and copays may apply.

Medicaid will cover some long-term care costs, but to be eligible you have to exhaust virtually all of your personal resources. This could create complications for your spouse, who may have fewer assets and/or less income to live on if you need to be cared for in a nursing home.

Do you need insurance?

Bypassing long-term care insurance might be the right choice if you have a lot of money (in which case you can afford to set aside enough money for years of care while still leaving enough to support a spouse), or if you don’t have much money at all (in which case you’re likely to qualify for Medicaid soon after entering a nursing home).

But if you fall somewhere between these two extremes, you may want to consider long-term care insurance.

Determining what kind of policy to buy can be a major challenge, because the cost varies dramatically depending on your age, the amount of coverage and the features included. Discuss it with your advisor, who will help you select the option that’s best for you.

If you’re unhappy with the amount of taxes you’ve been paying on your investments, you might want to start planning now so that next year you maximize the money going into your pockets and minimize that going into Uncle Sam’s.

Here are some tips:

Make all capital gains long-term gains; the tax treatment of a capital gain depends on how long you’ve owned the asset before you sell it. Gains on the sale of assets held for longer than a year are treated as long-term gains and are taxed at a maximum rate of 20 percent.

On the other hand, gains on the sale of assets you’ve held for a year or less are treated as short-term gains and are taxed at the rate you’re currently paying on regular income, which can be much higher.

Select which lots to sell. You can reduce your capital gain by selling shares purchased at the highest price. To do this you must specify to your financial planner or investment company which shares are to be sold.

Use capital losses to offset capital gains – both long-term and short-term capital losses can be used to offset capital gains on a dollar-for-dollar basis. The maximum capital loss you can deduct in a year is $3,000, but any losses that exceed $3,000 can be carried forward into future years until you have written them off completely.

Note that if you take a taxable loss on an investment and feel it has the potential to rebound, you can buy it back – but only after 30 days, due to the so-called wash-sale rule. If you buy it back within 30 days, you won’t be able to take the loss.

By minimizing your capital gains taxes, you can potentially save thousands of dollars – it’s well worth the effort.

This article is not intended to provide tax or legal advice and should not be relied upon as such. Any specific tax or legal questions concerning the matters described in this article should be discussed with your tax or legal adviser.

Municipal bonds and bond funds – both of which offer the potential for tax-free income – have long been popular among investors in higher tax brackets.

But are they an appropriate investment for you?

Municipal bonds are issued by state and local governments. They’re used to finance public projects and certain types of private projects.

Municipal bonds are tax exempt

Traditionally, investors have purchased municipal bonds because the interest on them is exempt from federal taxes and may also be exempt from state and local taxes.

For example, a resident of California likely won’t pay state or local taxes on a state of California bond.

The actual yield on a municipal bond may be lower than on a taxable investment. However, you want to consider the “tax equivalent yield,” which is the yield of a municipal bond after you’ve considered the fact that you aren’t taxed on the bond’s interest. You may find that its tax-equivalent yield is actually higher than the yield on a taxable investment.

Consider tax-equivalent yield

To determine this you’ll need to calculate a municipal bond’s tax-equivalent yield. First, obtain the yield of the municipal bond or bond fund you are considering. Then, determine your tax bracket. Finally, divide the yield of the municipal bond or bond fund by 100% minus your tax bracket.

For example, suppose you are in the 30% tax bracket. You currently own a corporate bond yielding 8%, and you want to know whether a municipal bond or bond fund yielding 6% is a better investment.

If you divide the yield of the municipal bond (6%) by 100% minus 30% (70%), you’ll get a tax-equivalent yield of 8.6%.

In this case, the tax-equivalent yield of the municipal bond or bond fund is more than the yield of the corporate bond, so the municipal bond might be a better investment for you.

To make a comfortable retirement possible, proper financial planning is crucial. You need to know your sources of income, the amount you can expect to receive from each source and whether those sources are likely to last throughout your retirement years.

Mistakes can prove disastrous to your financial future. So try to avoid the common ones noted below:

Putting other financial goals first. You probably have several financial goals. You may, for example, be saving for a down payment on a second home. Don’t let other goals supersede your goal of a financially secure retirement.

Underestimating your life expectancy. As life expectancy increases, you may need to plan and invest for a longer retirement.

Incorrectly calculating retirement expenses. You may believe you’ll need a certain percentage of your preretirement income in your retirement. But should you plan based on a general percentage? It’s easy to underestimate.

Ignoring inflation. Investors who are uncomfortable with market volatility and therefore decide to invest only in Treasury bills, insured fixed-rate CDs and savings accounts must accept the fact that inflation could potentially eat away at their investment return. That’s because inflation could be higher than the returns offered by these investment vehicles.

Not taking full advantage of all available tax-deferred investing options. If you’ve already contributed the maximum to your company’s 401(k) plan, consider investing in another option such as an IRA.

When you use the term “portfolio turnover rate,” you’re usually referring to the trading activity that occurs in a mutual fund over the course of a year. A fund with a high turnover rate likely trades more frequently than one with a lower turnover rate. The Securities and Exchange Commission requires mutual funds to publish their portfolio turnover rate.

A lower turnover rate is a good indicator of a fund’s tax efficiency: When securities in a fund’s portfolio are frequently bought and sold by portfolio managers, the fund’s shareholders have to pay more taxes. Even if you do not sell or exchange your fund shares, you must pay taxes on distributions paid to shareholders by the fund itself.

You can expect to see some deviation in turnover according to the type of fund you’ve invested in.

For example, value-style equity funds – which often invest in out-of-favor stocks that are expected to come back into favor – usually have relatively low portfolio turnover rates; the strategy involves holding on to a stock until the market recognizes its value, which could be a long time.

Index funds – which track a particular index such as the S&P 500 – tend to have limited portfolio turnover because the stocks that make up their indices change infrequently.

Check out your portfolio’s turnover rate. You may be surprised what it reveals.

The legal and tax information contained in this article is merely a summary of our understanding and interpretation of some current provisions of tax law and is not exhaustive. Consult your legal or tax advisor for advice and information concerning your particular circumstances.

Some people believe they risk losing some or all of their money by investing. But did you know that not investing could be even riskier?

Let’s say a 35-year-old has decided to invest for her retirement and is putting $750 a month (a total of $9,000 a year) in a tax-deferred account such as a 401(k).

She’s convinced the bull market will halt suddenly, so she’s invested her money in a low-risk investment vehicle earning 6% a year.

Flash forward 25 years. This investor is about to retire and has accumulated roughly $523,000. Will it last another 20 years or so?

Perhaps not. After 25 years, $523,000 is equivalent to $244,000 (assuming 3% annual inflation). And when you take out what is owed in taxes, the total dwindles even more. It may not be enough to live on for 20 years.

The moral of the story: Don’t let all your savings sit in a checking or savings account because you fear risk.

To build a diversified portfolio, you should consider investing in individual stocks and bonds as well as cash or in mutual funds that hold these asset classes.

Of course, investing more aggressively isn’t an appropriate strategy for all investors. Returns are not guaranteed. But it is an option to consider.

Also, remember, diversification doesn’t end at having a mix of stocks, bonds and cash. There are many types of equity investments: growth, value, large-cap, small-cap, international, domestic.

There are also many types of bond investments, from municipal to high yield. And at any given time, one type tends to outperform the others. So be sure to consider all your options.

One option you may not want to consider is letting your money languish because you are afraid of risk. Your financial advisor can help you compare options to get the most from your hard-earned savings.